Gap Narrowing Between Contract Rates, Spot Market Prices, Report Says
The gap between spot-market prices and contract rates is closing, according to the latest Chainalytics-Cowen Freight Index, suggesting a rebound from a difficult February marketplace.
“The trucking market remains soft but is showing signs of bouncing off the bottom,” wrote Jason Seidl, industry analyst at Cowen & Co. “Spot rates have closed much of the gap with contracted rates in both dry-van and refrigerated markets. This could be because new contract rates are renewing at lower levels, the spot market has picked up, or both.
Refrigerated spot rates were above contract rates in the final week of March. This indicates the market has picked itself off of the February lows.”
Dry-van spot rates were 0.2% lower than contract rates, on average, which represent pricing that’s about one month old. Spot rates were higher than contracts in the second half of 2016, but the tables flipped earlier this year.
The Chainalytics-Cowen Temp Control Freight Demand Index shows that spot rates were 0.1% higher than contract rates in March due to the surge in produce and beverage season with the spring.
“Spot rates showed some strength relative to contract rates in March. That’s consistent with seasonal trends from the past two years. The ELD mandate in December can’t come fast enough for the large truckload carriers,” Seidl wrote in the report.
